The Securities and Exchange Commission (SEC) has charged the credit ratings agency Moody’s for internal control failures and failing to clearly define and consistently apply credit rating symbols.
Some $16.25 million in penalties was applied for Moody’s, the SEC said in a written statement on Tuesday.
"Moody’s agreed to pay $15 million to settle charges of internal control failures involving models it used in rating U.S. residential mortgage-backed securities (RMBS) and will retain an independent consultant to assess and improve its internal controls," according to SEC.
The agency separately agreed to pay some $1.25 million fine and to review its policies, procedures, and internal controls regarding rating symbols.
Although Moody’s accepted to pay penalties to settle the charges, it officially did not admit or deny the SEC’s indictments, the statement read.
"Moody’s failed to establish and document an effective internal control structure as to models that Moody’s had outsourced from a corporate affiliate and used in rating RMBS from 2010 through 2013. Moreover, Moody’s failed to maintain and enforce existing internal controls that should have been applied to the models."
By Jeyhun Aliyev